Dec 18 2020
Today, I went to the floor and objected to another round of stimulus checks that were not reformed from the CARES Act to better target Americans who need relief. Every Senator wants to help those who have been unable to work or have had their hours reduced due to government mandated closure to slow the spread of the coronavirus. We’ve had nine months since the CARES Act to understand this virus and to examine if stimulus checks and other economic programs totaling $2 trillion actually served to help those who are in need through no fault of their own. The objective data on the distribution and use of the CARES Act stimulus checks, when looking at today’s employment numbers, do not justify another broad-brushed mailing of checks paid for by our children’s futures.
In my speech objecting to Sen. Hawley’s bill for another round of stimulus checks identical to that of the CARES Act, I laid out the important data Americans and Congress should be looking at to make sure we’re spending taxpayers’ money in the appropriate way to help those in need. My remarks below:
“I think every Senator in this chamber shares [Senator Hawley’s] concern for people who are hurting because of this covid pandemic. Businesses have closed. People are on unemployment. People are in need through no fault of their own. This is an act of God, and that’s one of the reasons why I certainly supported the CARES Act. That was over $2 trillion.
In total, this body has passed well over $3 trillion, 15 percent to 16 percent of last year’s GDP in terms of financial relief. My comments here are really not directed specifically at the Senator from Missouri’s proposal because he makes many good points. We do have working men and woman. We have households that—again through no fault of their own—are struggling, and we need to provide financial support. I think my comments are in some respect more general from the standpoint of how we’ve done that. And as I have explained to my colleagues in conference, by and large, the initial relief packages here were a shotgun approach. We had to move fact. We had to do something big. We had to make sure that markets wouldn’t seize, that financial relief could be sent to people very quickly. And so we passed over $3 trillion in financial relief. I knew it would be far from perfect. It was far from perfect.
But now we’ve had a lot more time, and anything we consider for this additional package that we’re considering now, that is being debated, that is being discussed, that’s being negotiated, ought to be far more targeted. One of the reasons we are currently $27.4 trillion in debt, which is about 128 percent of last year’s GDP. If we do this bipartisan deal, another trillion dollars, we will be $28.4 trillion in debt in the next three or four months. That’s 132 percent of GDP. When I came to the Senate, we were a little over $14 trillion. Our GDP was over $15 trillion. We were actually below 100% of GDP.
I know I’m using a lot of numbers right now, and I’m going to use more because that’s part of the problem. And one of the reasons we are $27.4 trillion in debt is we only speak about need. We only talk in terms of compassion. We all have compassion. We all want to fulfill those needs. We just don’t talk in numbers very often. We don’t analyze the data. We don’t take a look at what we did in the past and see did it work or didn’t it work. What was spent well, what was wasted...
Let me go through some numbers. I will go through slowly so people can understand at least my perspective of why I am so concerned about our nation’s deb, the fact that we are mortgaging our children’s future, and I think we need to be very careful about mortgaging it further then we aren’t doing it in a targeted fashion.
So again, before the covid recession hit, in December 2019, we hit a record number of people employed in this country. It was a record. Our economy was humming because of President Trump’s administration putting forward a reasonable level of regulation and a competitive spirit that supercharged our economy. We were at 3.5 percent unemployment. When I took econ, five percent was considered full employment. We were at 3.5 percent unemployment. Then covid hit. And by April, we’d gone from almost 159 million people employed in this country to just a little over 133 million people. So that was a reduction in employment of a little more than 25 million people. Again, from 159 million to 133 million, 25 million people less employed in this nation.
Now, the good news. Even though the pandemic is still not over, but the vaccine is being administered. It is being administrated. I think the end is in sight. We’ve already gained 16 million people employed. So now employment stands at 149.7 million people. 150 million people are employed, down about 9 million jobs. 9 million. Okay? So I want you to keep those numbers in mind because they’re important. And our unemployment rate stands at 6.7 percent. By the way, the number of people unemployed according to the Bureau of Labor Statistics is about 10.7 million.
Now, in the CARES Act, again, payments, what Senator Hawley wants to duplicate. No changes, no modifications, no further targeting. What those economic impact payments were is about $275 billion to 166 million people. Again, remember, 25 million people lost their jobs. We sent out checks to 166 million people, averaging about $1,673 per person. What’s more relative is how many households do you send those checks to? We sent them out to about 115 million households, about $2,400 per household. So again, $275 billion to 115 million households. That was about 4.5 times more than the number of households than the number of jobs lost.
Today, with only 9 million jobs lost. Not only, I mean, that’s a big number. I’m not minimizing that. But with nine million jobs lost, if we just repeated, sent it out to another 115 million households, that’s 12.6 times the number of jobs lost. And if we double it, it goes from $275 billion to $550 billion. That’s half a trillion dollars. I know a trillion dollars doesn’t sound like much anymore. It seems like hundreds of billions, seems like more. But now we’re dealing in one to two trillion dollars. It’s pocket change, apparently.
How is that money spent? Did it really, was it really spent on essentials? Was this money really needed? Was there any hope of actually that money being stimulative to our economy? Well, we have one study from the Federal Reserve Bank in New York. They issued it on October 13, 2020. What they did is they, since 2013, they’ve been sending out an internet national survey to 1,300 households called the Survey of Expectations. They sent out one in June and one in August. And here’s what those survey results said. Of the $2,400 sent out, 18 percent was spent on essential items, 8 percent was spent on nonessential, 3 percent on donations, for a total of 29 percent spent, is what they call the marginal propensity consumed. The other 71 percent equally divided, 36 percent of that was saved, so our nation’s savings rate has increased, and 35 percent went to pay off debt, credit card debt. They also asked the question of what happened to the unemployment payment? Very similar results, 24 percent of the plus-up, the $600 per week to state unemployment benefits, 25 percent was spent on essential, 4 percent on nonessential, 1 percent on donations. 29 percent was the marginal propensity to consume from the unemployment payment. 71 percent for savings and for debt repayment.
Now, they also looked ahead, assuming that we’re going to do another round of stimulus checks. This time they asked their respondents, how would you spent if you got $1,500, if you got a check. This time they said they’d spend about 14 percent on essential, 7 percent on nonessential, 3 percent on donations. A total of 24 percent would be the marginal propensity consumed. 76 percent on savings and debt repayment. So I don’t think you can take a look at these direct payments to individuals as stimulative. Obviously, 18 percent to 24 percent is spent on essential items. We ought to figure out how to provide that money so that people can spend it on essentials. Again, that’s only 18 percent to 24 percent.
I do want to talk a little bit about past stimuluses. I personally don’t believe they do much to stimulate the economy. I think the best way to stimulate the economy is again what this administration has done—lower regulation to a reasonable level. Nobody argues for no regulation. We need a reasonable level and have a competitive tax system. I fear the next administration we may just repeat the mistakes of their Obama-Biden administration, and here’s the proof of their mistakes. Again remember those employment numbers. A record of 159 million. Currently 150 million people being employed. Back in the Great Recession, we did have an employment of about 146 million people in January of 2008. By December 2009, that this dropped to 138 million people employed. But when President Obama took office, he had total control of Congress, a filibuster-proof majority here in the Senate. And within a month, they enacted the American Recovery and Reinvestment Act, $787 billion of proposed spending. In February of 2009, there were 141.6 million Americans working. The unemployment rate was 8.3 percent. Again, it continued to dip to December 2009 when it got down to 138 million. It took us three years from February of 2009 to get back to 141.6 million Americans working. And that’s with a $800 billion stimulus package that did not work, but it further mortgaged our children’s future by another $800 billion.
I wish these things worked. A quick aside, part of that American Recovery and Reinvestment Act, against Democrats had total control, filibuster-proof majority in the Senate. Do you know how much they plussed-up state unemployment benefits to help the unemployed, those 8.3 percent of Americans? They plussed it up by a whopping $25 per week. Now they’re arguing that $300 per week, which I believe is the current proposal, isn’t enough. Kind of makes you wonder, doesn’t it?
So, in summary, kind of reviewing these numbers, we currently are at 6.7 percent unemployment. I don’t recall ever in the United States history where we’ve even begun to think that we should even spend $100 billion to stimulate an economy at 6.3 percent unemployment. But this is different. We have underemployed, We have families in need. There’s no doubt about it. I completely support some kind of program targeted for small businesses so they can reemploy, so they can reopen, to restore capital. Their life savings have been wiped out. I have proposals. They have been ignored. So what I fear we’re going to do with this bipartisan package and what the Senator from Missouri is talking about is the same thing—a shotgun approach. We will not have learned the lessons from out very hurried, very rushed, very [phrase] earlier relief packages. We’re just going to do more of the same, another $1 trillion. It takes our debt from $27.4 trillion to $28.4 trillion in a couple months. Doing virtually no revisions, no improvements. And certainly what the Senator from Missouri is talking about with respect to these economic impact payments, no revisions at all. Just spend another $275 billion. Sent it out to 115 million households when we are currently at about nine million jobs less than we were in a record economy before the covid recession.
So for all those reasons, I not only object to what Senator Hawley is proposing here, but I’m certainly lodging ,y objection to what’s barreling through here. The train has left the station on the package that’s being negotiated right now that is way too big, that authorizes more money even though we’ve got $600 billion that’s there just for repurposing—no reauthorization required. 52 Republicans supported it. But that’s not good enough. We’ve got to add another $300 billion to $400 billion on top, which is more that we are mortgaging our children’s future, wihout reforms, without targeting.”